China Wine

Weekly digest: ‘toughest year’ for China’s wine trade, April wine imports plummet and more

Here are the essential readings on China's wine industry this week: a Chinese official from the country's drinks association warned 2020 will the toughest year; April wine imports plummeted; and China's own wine rating system is starting to take shape.

Welcome to our China Wine Market Briefs, a new section created by Vino Joy News to bring to you the latest and essential readings on what’s happening in Chinese wine industry reported in Chinese and English language press.

Market Watch

Toughest year. A high-ranking official from China’s official drinks regulatory organisation warns that 2020 will be “the toughest” year for China’s wine industry of the recent 10 years, the sharpest warning so far from a Chinese official. Wang Qi, who serves as deputy head of China’s Alcoholic Drinks Association (CADA), made the comments at a wine event in Beijing, according to a report by Chinese drinks publication Jieyejia, highlighting the difficulties the country still faces to resuscitate the country’s wine market even after containing the Covid-19 outbreak. In China, restaurants and bars have resumed operations but wine sales are still gradually recovering, as the majority of wine consumption in the country mainly coming from business diners and banquets have yet returned to pre-Covid level.

China’s wine imports recorded “cliff-like fall” in April. Though no official figures have been released but Chinese research firm Huaxia Chanjing (华夏产经) said the April data showed China’s wine imports dropped by 47.8% by volume to 29.15 million litres, while value fell by 48.5% to US$138 million compared with the same month last year. The reason for the sharp decline as Chinese drinks publication WBO said could be attributed to increased international shipping costs, and cancelled orders in main producing countries in Europe because of the coronavirus pandemic, coupled with increased cash flow problem with mainland merchants. Merchants interviewed by WBO estimated that the country’s import figures will pick up starting from June.

Cautionary Tale

A cleaner in China’s southern province Guangdong stole over 80 bottles of rare wines including Bordeaux first growth Chateau Lafite Rothschild, Chateau Latour, Chateau Mouton Rothschild, Napa cult wine Screaming Eagle and Penfolds’ top range bottles. The woman surnamed Li stole the wines on her job while working as a cleaner for a company in Guangdong, and sold them to an accomplice at discounted price and profited for roughly RMB 200,000 (US$28,000), according to published court document. The police believed the number of stole wine is higher than the suspect claimed but the victim failed to provide purchase receipts. Guangdong is located right across wine tax-free Hong Kong, where wines are regularly trafficked to the mainland through Guangdong legally and illegally. The woman is sentenced to four years and three months in prison.

Outlook 

As we feared the US is moving closer to revoke Hong Kong’s special trade privileges in response to the security law. American president Trump has yet to provide a timeline or detailed scope of punishment but has said customs and travel would be first affected after his administration declared Hong Kong is “no longer autonomous from China.” Different from what America’s China hawks and far-rightists had expected, Trump did not come down as hard as expected on China, and left the door open for “a few exceptions” including its extradition treaty with Hong Kong and economic privileges enshrined in US law that differentiate it from mainland China. Nonetheless, it’s creating uncertainty for American business in the city. “It is a sad day. We are caught in the pain of a cold war, which is bigger and wider than Hong Kong,” Tara Joseph, president of the American Chamber of Commerce in Hong Kong (AmCham), told SCMP

China this week released more details on its own wine rating system as opposed to the international systems used by critics like Robert Parker, Jancis Robinson or James Suckling. The system which first announced in late 2018 as I wrote before for the drinks business is billed as more suitable rating system “based on Chinese tastes” by its advocates. The Chinese wine rating system may serve as a base for formulating a national (wine) recommendation system, according to China Alcoholic Drinks Association, the country’s official drinks regulatory body. We have obtained a few samples of the wine assessment system and we will post more details in a report this week. Stay tuned.

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